As the dominoes fall, it's clear that the peripheral countries that are in the news so much -- the PIIGS as we like to call them (Portugal, Ireland, Italy, Greece and Spain) -- will have to restructure their obligations," he tells BNN. "I think that's coming much sooner than others would think and that is something you must prepare for in 2012."
"You see the deposits leaving the periphery at an annualized rate of more than 20 percent. This is the final precursor for a sovereign default and it's happening while we speak." Bass believes that the excessive leverage at European banks will continue to haunt the region.
"Europe's banks have three times as much leverage from equity to assets that U.S. banks have," he says. "Spain, by looking at a snapshot on a piece of paper looks like they might have a manageable scenario, but when they recap their banks they won't have a manageable scenario and they have to recap their banks and so do the rest of Europe."
Bass says Germany -- considered the economic powerhouse of Europe -- is no better: "[Germany currently has an] 82 percent on balance sovereign-to-debt GDP today…in a post-recap world Germany will be north of 100 percent and will also be in a very difficult scenario."